Costco vs. Walmart

Business Model ElementCostcoWalmartSimilaritiesDifferencesCompetitive Advantage
Customer SegmentsMembers seeking bulk purchases, businessesGeneral consumers, businessesBoth serve consumers and businesses. Costco focuses on members seeking bulk purchases. Walmart caters to general consumers and businesses.Costco’s emphasis on serving members and businesses with bulk purchase needs. Walmart’s broader customer base, including general consumers, and a wider range of products and services.Membership-Based (Costco), Broad Consumer Base (Walmart).
Value PropositionSavings through membership, limited product selectionEveryday low prices, wide product varietyBoth emphasize cost savings. Costco offers savings through membership and limits product selection to save costs. Walmart focuses on everyday low prices and offers a wide variety of products.Costco’s value proposition of savings through membership and a curated selection of products. Walmart’s proposition of everyday low prices and extensive product variety.Savings through Membership (Costco), Wide Product Variety (Walmart).
ChannelsWarehouse storesPhysical stores, e-commerceBoth operate physical stores. Costco’s primary channel is warehouse stores. Walmart utilizes physical stores and e-commerce for sales and distribution.Costco’s exclusive reliance on warehouse stores. Walmart’s use of both physical stores and an extensive e-commerce presence for sales and distribution.Warehouse Stores (Costco), Omnichannel Presence (Walmart).
Customer RelationshipsMember-focused, limited advertisingBroad consumer base, advertisingBoth maintain customer relationships. Costco focuses on member satisfaction with limited advertising. Walmart caters to a broad consumer base and invests in advertising and marketing.Costco’s member-centric approach with a focus on member satisfaction and less reliance on advertising. Walmart’s broader consumer focus and substantial investment in advertising and marketing campaigns.Member-Centric Approach (Costco), Broad Consumer Base (Walmart).
Key ActivitiesInventory management, membership services, limited SKU selectionInventory management, diverse product offerings, e-commerce servicesBoth engage in inventory management. Costco offers membership services and maintains a limited SKU selection. Walmart manages diverse product offerings and provides e-commerce services.Costco’s focus on efficient inventory management, membership services, and offering a curated selection of SKUs. Walmart’s diverse product offerings, including a vast SKU selection, and investment in e-commerce services.Efficient Inventory Management (Costco), Diverse SKU Selection (Walmart).
Key ResourcesWarehouse facilities, membership basePhysical stores, extensive supply chain network, e-commerce platformBoth rely on physical facilities. Costco’s key resources include warehouse facilities and a membership base. Walmart’s resources encompass physical stores, an extensive supply chain network, and an e-commerce platform.Costco’s exclusive reliance on warehouse facilities and a membership base. Walmart’s advantage in the vast network of physical stores, robust supply chain, and a significant e-commerce platform.Warehouse Facilities (Costco), Extensive Store Network (Walmart).
Key PartnershipsSuppliers, service providers, credit card companiesSuppliers, technology partners, e-commerce platformsBoth collaborate with suppliers. Costco partners with service providers and credit card companies. Walmart partners with suppliers, technology providers, and e-commerce platforms.Costco’s partnerships with service providers and credit card companies to enhance member benefits. Walmart’s diverse partnerships with technology providers and e-commerce platforms to expand its digital presence and services.Member Benefits (Costco), Digital Expansion (Walmart).
Revenue StreamsMembership fees, product salesProduct sales, e-commerce revenueBoth generate revenue through product sales. Costco derives revenue from membership fees and product sales. Walmart earns revenue primarily from product sales, including e-commerce.Costco’s additional revenue stream from membership fees. Walmart’s primary revenue source from product sales, supplemented by e-commerce revenue.Membership Revenue (Costco), E-commerce Growth (Walmart).
Cost StructureLow-cost model, limited advertisingCost-efficient operations, advertising expensesBoth maintain cost-efficient operations. Costco follows a low-cost model with limited advertising expenses. Walmart focuses on cost-efficient operations but invests in advertising and marketing.Costco’s low-cost model with minimal advertising expenses. Walmart’s cost-efficient operations with a more substantial investment in advertising and marketing campaigns.Low-Cost Model (Costco), Efficient Operations (Walmart).

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Costco Business Model

Costco’s strategy can be summarized as a selection of high-quality items sold in bulk sized in warehouses around the US and Canada primarily and with a substantial part of its business focused on selling merchandise at a low-profit margin. Costco also uses a single-step distribution strategy to sell its inventory before it gets paid to suppliers. Costco generated almost $227 billion in revenue in 2022, of which $5.84B came from 65 million paid members.

Costco SWOT Analysis

Costco is a large American multinational corporation with a focus on low-cost, membership-only retail warehouse clubs. Costco is the 4th largest retail operator in the world, operating 785 warehouses in 10 different countries. Indeed, it has enjoyed rapid success growing from zero to $3 billion in sales within six years.

Who Owns Costco

Costco runs a high-quality, low-priced business model powered by its memberships that draw customers’ loyalty and repeat purchases. Top institutional investors comprise The Vanguard Group, 8.79%, and BlackRock, 6.77%. Top individual shareholders include Craig Jelinek, Chief Executive Officer of Costco, and Charles T. Munger (Warren Buffet partner and co-owner of Berkshire Hathaway).

Wholesale Business Model

The wholesale model is a selling model where wholesalers sell their products in bulk to a retailer at a discounted price. The retailer then on-sells the products to consumers at a higher price. In the wholesale model, a wholesaler sells products in bulk to retail outlets for onward sale. Occasionally, the wholesaler sells direct to the consumer, with supermarket giant Costco the most obvious example.

Costco Financials

Costco generated almost $227 billion in revenue in 2022, compared to nearly $196 billion in revenue in 2021, and over $166 billion in revenue, in 2020. Costco also generated $5.84 billion in net income in 2022, compared to $5 billion in 2021 and $5 billion in 2020.

Costco Employees

Costcohad 304,000 employees in 2022, compared to 288,000 in 2021 and 273,000 in 2020.

Costco Members

Costco Memberships
Costo had 65.8 million paid members in 2022, compared to 61.7 million in 2021 and 58.1 million in 2020.

Costco Membership Revenue

Costco generated $4.2 billion in membership revenue in 2022, compared to $3.87 billion in 2021 and $3.54 in 2020.

Walmart Business Model

With over $572 billion in net sales in 2022, Walmart operates a differentiated Omni business model with three primary units comprising Walmart U.S., Walmart International, and Sam’s Club (a membership-only warehouse club), together with Walmart+. This subscription service includes unlimited free shipping, unlimited delivery from its stores, and discounts launched in 2021.

Walmart Revenue vs. Profit

Walmart generated over $572 billion in revenue in 2022 and over $13.6 billion in net profits in the same year. Compared to over $559 billion in revenue in 2021 and over $13.5 billion in net profits.

Walmart Revenue

Walmart generated over $572 billion in revenues in 2022, compared to over $559 billion in 2021.

Walmart Customers

Walmart had 230 million global customers in 2022, compared to 240 million customers in 2021 and 265 million customers in 2019.

Walmart Stores

In 2022, Walmart had 10,500 employees globally, compared to 11,400 employees globally, in 2021.

Walmart Employees

Walmart had 2.3 million associates globally in 2022, the same number in 2021. While in 2020, Walmart had 2.2 million associates globally.

Walmart Mission Statement

Walmart’smission can be summarized as “helping people around the world save money and live better – anytime and anywhere – in retail stores and through eCommerce.” While its vision is to “make every day easier for busy families.” Walmart defines “busy families” as the bull’s eye of its business strategy.

Walmart Organizational Structure

Walmart has a hybrid hierarchical-functional organizational structure, otherwise referred to as a matrix structure that combines multiple approaches. On the one hand, Walmart follows a hierarchical structure, where the current CEO Doug McMillon is the only employee without a direct superior, and directives are sent from top-level management. On the other hand, the function-based structure of Walmart is used to categorize employees according to their particular skills and experience.

Walmart SWOT Analysis

From humble beginnings just over 50 years ago, Walmart has become the world’s largest retail company. A single small discount store in Arkansas has now expanded to over 11,000 stores in 28 countries. Some reports suggest that the company makes $1.8 million of profit every hour.

Read Also: Walmart Business Model, Walmart SWOT Analysis, Walmart Mission Statement, Costco Business Model.

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